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Could FTC Settlement Derail Activia's Advertising?

Experts Say the Company Likely to Modify Its Iconic Jamie Lee Curtis Ads Only Slightly

CHICAGO (AdAge.com) -- Dannon has spent hundreds of millions in marketing dollars to position Activia yogurt as a brand that can help regulate digestion if eaten every day -- advertising that's become so much of the pop-culture fabric of this country that the brand and its spokeswoman, Jamie Lee Curtis, have been mocked by "Saturday Night Live." Now, following an investigation by the Federal Trade Commission, the brand has agreed to make that claim only with the caveat that it has to be eaten three times a day to achieve the benefit.

Dannon agreed to pay $21 million to settle state and federal investigations into charges regarding its alleged exaggerated health claims of Activia.

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Which leads to the question: Did the FTC just undermine the entire basis of a marketing campaign that's built Activia into a juggernaut that racked up $505 million in supermarkets last year?

No, said David Browne, senior analyst at Mintel. "I don't think they'll be dramatically hurt in terms of sales because the product had been really successful, and strong word-of-mouth has driven sales. The average consumer is pretty loyal to the product. The brand is in a great position to keep these consumers. I don't think consumers are going to see this news and stop." Dannon won't discuss just how it will change its advertising, saying only "After the comprehensive review with regulators of Dannon's scientific substantiation, consistent with the FTC standards, Dannon agreed to more clearly convey that Activia's beneficial effects on irregularity and transit time are confirmed on three servings per day."

But it's probably safe to assume there will be small tweaks to the advertising rather than a major overhaul. "The settlement will impact the way they run their marketing campaigns and labeling, but they have so much flexibility even with the new restrictions, that shifts can be subtle," said Mr. Browne. "They can still make claims that talk about digestive health. And because the Activia brand is so strong, even if they have to modify specific claims, the message is still intact."

Under the terms of the agreement with the FTC, Dannon agreed to pay $21 million to settle state and federal investigations into charges regarding its alleged exaggerated health claims of Activia. According to the agreement, Dannon can't say that Activia alleviates any digestive issues unless it advertises that consumers must eat three servings of it daily, but it may claim that eating fewer than three servings a day provides these benefits only if the company is relying on two well-designed human clinical studies substantiating that the claim is true.

Changes might be easy in print and TV ads, in which Dannon could insert the required language in small font "that nobody reads but it's on there should the consumer have questions on the validity of these claims," said Rick Shea, founder of Shea Marketing Consulting and a former Kraft marketing executive. It could be harder to do on packaging "because you have very limited space."

Mr. Browne said Dannon will probably make subtle changes to avoid any major packaging modifications. "They may create claims that are acceptable by the FTC that still allude to the benefit but don't make it so they have to drastically alter the way the package is written or the way the products should be used. It's sort of like the path of least resistance."

In fact, Dannon's unlikely to mess much with a good thing. Activia has seen a surge in its grocery-store performance with sales for Activia yogurt and its fiber yogurt up 20.4% and 23.6%, respectively, in the year ended Nov. 28, according to SymphonyIRI. Dannon has spent about $69.1 million on Activia's various products in U.S. measured media during the first nine months of 2010, according to WPP's Kantar. The company spent $74 million in 2009 via Y&R Advertising, New York.

Lately, though, it looks like marketers are increasingly treading a little more carefully when it comes to touting health benefits of products. Mr. Browne said that at product trade shows in the last year he's noticed that manufacturers are much more cautious because they know the FTC is cracking down. "The way companies are going to act is to modify their claims and even lighten them so that they're not going to be scrutinized -- rather than go the other direction and pay for expensive studies and create very specific, almost medical products in the process. That tactic is not one that a lot of companies want to do."

The FTC in July had settled claims with Nestle, in which the company agreed to drop allegedly deceptive advertising claims about the health benefits of its Boost Kid Essentials drink.

As for whether consumers will continue to buy Activia based on its purported digestive benefits, Mr. Browne said, "Consumers might feel that any consumption is better than no consumption. The more educated consumers who are concerned with probiotics are probably going try to seek out more ways to get probiotics, like through supplements. The average consumer probably won't change their shopping habits. They may be irritated by the news of exaggerated advertising, but they'll probably still buy Activia."

And a new Jamie Lee Curtis spoof might appear on "Saturday Night Live."